Ganellen yet to take over any Kell & Rigby building contracts
Sydney-based construction group Ganellen has yet to take over any of the building projects that were being carried out by collapsed builder Kell & Rigby.
Ganellen commercial project director Chris Ahern told Property Observer the company was still in discussions on some of the projects but had not signed any contracts.
Ganellen negotiated an agreement with the administrators as the preferred bidder on 15 major projects worth $50 million from the Kell & Rigby collapse.
At a creditors’ meeting in April administrators PBB said Ganellen was tendering on three projects but had not secured any tenders to date.
Under the agreement with administrators, Ganellen is to report the value of unsecured creditors they pay on contracts they secured, but at the time no contracts had been awarded.
The projects range from a luxury housing estate for Lend Lease to school libraries for a council.
Ganellen chief executive Peter Maneas told The Australian that only two of the 15 projects suited its business but the company could not reach “equitable terms” on either of these projects.
Maneas says he has a responsibility the staff, shareholders and clients to only pursue projects that are financially viable.
Some former clients of Kell & Rigby have put out fresh tenders, including Bankstown City Council, which is seeking a builder for its $20 million library.
Lend Lease has re-tendered its St Patrick’s Estate Manly luxury house project.
Creditors of Kell & Rigby, one of Australia’s oldest building companies, voted at an April 2 meeting to wind up the company.
The company shut down its operations on February 8 with administrators Mark Robinson and Stephen Parbery appointed on February 10.
About 1,400 unsecured creditors – many of whom are employees of Kell & Rigby subsidiary businesses and contractors – are owed more than $16 million and will receive as little as 9¢ for every dollar owed, with some receiving nothing.
They include plumbing business G.M. Considine Plumbing, which is owed $500,000.
At the time of its collapse it was managing 24 projects and employed 124 staff.
Former employees, which rank as priority creditors, will receive just 24¢ out of every dollar of the $4.3 million they are owed.
The first secured creditor is the Commonwealth Bank, which is owed $2.2 million. Proceeds from the sale of Kell & Rigby’s Strathfield head office will pay the bank out in full.
The second secured creditor is property developer Mulpha, which is owed $3.5 million, with administrators estimating a shortfall in excess of $2 million.
In total secured creditors will be refunded $3.67 million.
The administrators’ report says that over the past 10 years Kell & Rigby worked on more than $400 million of projects in the residential and aged-care sectors, including projects with a number of public companies in addition to working with numerous private developers and investors. Projects ranged in size from $3 million to more than $85 million.
It first ran into difficulties as far back as 1998 when it commenced two significant residential projects Paddington Green and
“These residential projects proved to be extremely unprofitable and litigious, which significantly impacted the working capital position of the group,” says the report.
“One of these projects (which completed in 2002) resulted in losses of approximately $11 million due to cost escalation as well as another $4 million in relation to legal costs and defect rectifications,” says the report.